NPOWER – WHEN DOES THE CUSTOMER STOP BEING STRATEGIC?

The news from Npower just keeps getting worse. Last week the company announced a series of job cuts and operational rationalisation. At the weekend the press reported that service levels were poor, even by utility industry standards. Then this week there was further bad news on the service front – serious issues with billing accuracy.

This comes on the back of a substantial price hike and an environment where our key gas/electricity providers are under fire from all stakeholders.

Number one for service?

When I read all the bad news about Npower I was a little surprised. My mind went back only a few years to a series of ads that the company placed, “No1 for Answering Calls”. At that time Npower promoted itself as the friend of the customer, really understanding what made the difference.
If you think about it, it was a smart move. If you are a gas or an electricity utility what is it you can do to make yourself more attractive to the paying public?

Well perhaps by finding a better/more efficient type of gas or electricity – but no-one’s managed that yet and the mind boggles thinking about how different sorts of gas or electricity could come down the same line or pipes!

Then there’s price – key for many commodity providers. But in this market where is competitive pricing? The big energy companies typically follow each other, up or down.

So that leaves service, surely a way of keeping customers loyal. What is service here? Efficient and empathetic call centres, speedy response to enquiries, accurate bills, the feeling that the company cares.

Npower seems to have recognised that it’s falling down on service. So what is it doing?

Is outsourcing the answer?

Well it’s not closing its UK call centres but outsourcing them to Capita, “the UK leader in business process management and outsourcing solutions”. To sort its poor back office service (accurate billing etc.) it’s taken the decision to offshore the activity altogether to India.

Well that’s fine. Or is it?

What sort of message does this send to Npower’s customers? Probably what it is – an attempt to reduce costs.

When a company is in trouble in terms of the service it provides the last thing it should do is walk away from direct responsibility for that service. Outsourcing call centres to Capita means that Npower phone operatives are likely to eventually service other Capita clients. How can they become passionate about Npower and deliver real service when it’s not their employer but rather another client?

And then there’s the offshoring to India. Does this really mean that Npower believes that we simply can’t do back office service here in the UK? If so then they should be starting a debate on our paucity of our service delivery skills. Better, they should be trying to fix the problem here in Npower’s heartland.

Which takes us back to the title of this blog. When are customers strategic, or should I say when is customer service strategic?

All too often service levels can be compromised in the name of short-term profits. At a time when the industry is so under fire from customers and politicians surely a bold statement by Npower saying we’ve got some service problems, we’re going to fix them ourselves and we’re going to fix them here is what the public actually wants.

So what should companies like Npower actually do?

If there is a need to improve customer service, find out what customers actually want from the process. It’s unlikely they will vote for remote assistance.

If service levels are poor because of onshore activity, then improve onshore and send a positive statement to customers.

In a commodity industry, service has the power to be a positive differentiator. Customers need to be treated with empathy and respect…and that includes the solutions to poor service levels.

Outsourcing shouldn’t be seen as service improving – it rarely is.

What do you think? Am I being unfair on npower and other utilities? Am I being over protectionist? Do you believe that offshoring to India is the solution to improving customer service levels? Let me know.

Comments

S Baki
- 12/05/2013 , 09:09 AM

I totally agree, having recently changed my energy supplier from npower due to not being happy with their regular price increases and poor customer services.

Julian Rawel
- 12/05/2013 , 09:09 AM

Hi Seyhan
A key issue is how to get companies like npower to see the benefit of keeping customers long term, not through inertia but because they value the supplier.
Regards
Julian

Oleksandr Lobas
- 12/05/2013 , 09:09 AM

Dear Julian,
You are right and there is no surprise prices for key commodities are highly inelastic, what emerges from the very essence of an economic principles behind the market. Concerning customer service in such industry, we in Ukraine observe slight trend of imrovement, as reforms are taking place step-by-step, albeit the sector in a whole is still below the EU standards.
What is about Npower, it becomes evident that the company is not utilizing the stakeholder potential, since its clients are kept far cry from satisfactory service levels. This is a typical illness. Whilst I agree with you that more competition should be present at market, it is virtually impossible to use a “push” approach and press on those entities whose supply chain is tightly integrated with the concept of national security and economic stability (since Npower is a leading entity on the market). Their lobbying capacity makes them resilient.
At vice versa, as the business itself runs on a low risk margin, it casts a certain, let us say, degree of tranquility, and thus makes it obsolete for managerial body to develop the proactive strategic model, which is an endogenous “pull” force. This in turn distorts the marketing vision of the company, its quality management system, and makes it vulnerable to internal shocks, for instance – inability to keep the company’s sales channels up-to-date.
To my mind, the solution to the Npower’s case consists of four (or more) synergetic parts, as given below:
– Select and send ten key mid-level whitecollars to any A-class Asian company from the same industry, where they will have a 10-day practice how to serve the clients’ needs
– Impose or tighten a quality management code, such as kayzen etc. and coach the mid-management, including outsourced services, to follow it using a special renumeration policy and high contract penalties
– Transform the corporate hierarchy in order to foster the decision-making at places and put more responsibility on mid-level management
– Launch an NGO-managed programme to educate customers, as stakeholders, to demand for the higher service quality.
Thank you for your attention!

Julian Rawel
- 12/05/2013 , 09:09 AM

Hi Oleksandr
Thanks for your comment.
On the one had it’s about training and culture change but on the other it’s about senior management truly making the customer the centre of their service as well as revenue aspirations.
Regards
Julian

Sergio
- 12/05/2013 , 09:09 AM

I think in the modern corporate world there is a big disadvantage if you are a customer or user of the service. If a customer doesn’t pay a bill the service is cut off (with hefty reconnection fees) and people are swiftly taken to a process that goes up to the courts. If a provider overcharges that customer and doesn’t resolve the issue, what can they do? Complaint, send letters, make phone calls and waste a lot of time on it. That time, effort and expenses are never compensated regardless if they get the money back or not. There is now a culture (with legislation and bureaucracy to back it up) that protects corporate entities and makes it unpractical for individuals to follow small claims.

Julian Rawel
- 12/05/2013 , 09:09 AM

Hi Sergio
Your comments are quite sad, though absolutely accurate.
Big corporates too frequently see customers as financial assets rather than living beings. If they saw them as both they’d be on route to bigger assets and happier customers.
Regards
Julian

Frank
- 12/05/2013 , 09:09 AM

A good example how ‘saying one thing and doing another’ produces confusion or worse. If the company invested into improving home-made capabilities to better deliver on their promise, what an inspiring communication platform they had.

I enjoy your articles. Many thanks, Julien

Frank

Julian Rawel
- 12/05/2013 , 09:09 AM

Hi Frank
Thanks for your comments. In service terms what you say is so obvious – but why do companies ignore the obvious?
Regards
Julian

Florian
- 12/05/2013 , 09:09 AM

Hi Julian,

An interesting article and from my opinion you are right. “Npower should treat customers with empathy and respect”.
Many (big)companies are cutting in wages or jobs during a depression. They are looking too much into the figures instead of paying attention to the customer.
Npower’s greatest assets are their customers. Npower have to realize that without customers they wouldn’t exist.
I always try to keep in mind what Michael LeBoeuf said, “a satisfied customer is the best business strategy of all”!

Regards, Florian

Julian Rawel
- 12/05/2013 , 09:09 AM

Hi Florian
Thanks for your comment. Everyone seems to be thinking the same. Its time to persuade corporate leaders to really appreciate the experiences of their customers. That’s why I developed Market Echoes.
Regards
Julian

Anita
- 12/05/2013 , 09:09 AM

Dear Julian,
While customer-centricity is talked by almost all corporates, it is interesting to understand the following important processes:
1. Listening to current and potential customers.
2. Linking the customer voice to change in the customer service process
3. Testing the efficacy of customer interface.
In most companies the customer voice is heard by an outsourced company possibly an offshore no-name whose cultural background is so diverse that he can hardly be blamed for a mechanical job. In fact he/she takes the entire customer anger and frustration for what is wrong and accolades for what is right.
Some corporates have taken the initiative of designing a performa to catch customer voices. These performas are based on the companies perception of Customer and not Customers perception of company and its services. Mirror is already coloured so the outcome is limited.
Many companies don’t have this ritual either.
Usually there is a small and least important department/unit that collates whatever customer insight comes. Since in the large corporates power play, these are pigmies, they are not heard enough and hardly acted upon.
Those running the customer processes remain dissected with no reference to these lesser mortals called research team and invariably dictate their understanding of what the customer wants. Ultimately, the falling revenue hits Business Development and Finance directly who look for solutions elsewhere than where the problem sits.

Julian Rawel
- 12/05/2013 , 09:09 AM

Hi Anita
Thanks for your detailed comment.
A simple summary – how many managers at “the top” ever really engage with their customers or employees who engage with customers? Not too many…thus your comments.
Regards
Julian